On June 30, 2025, New Jersey Governor Phil Murphy signed into law Assembly Bill No. 5804 (A5804), significantly revising the state’s Mansion Tax transfer fee regime on real estate transactions exceeding $1 million in consideration and the Controlling Interest Transfer Tax.
Effective July 10, 2025, the following critical changes take effect:
- Higher graduated transfer fees are imposed on sales of high-value property.
- Responsibility for payment shifts to the seller (formerly the buyer).
- Controlling interest transfer tax rates are increased and aligned with deed-based transfers.
- Refund procedures and exemptions are clarified and expanded.
This bulletin summarizes the amended statutes and provides detailed guidance.
Property Types Subject to the Expanded Mansion Tax Fee for Deed Transactions
The following property classifications are subject to the additional mansion fee if the total consideration exceeds $1 million:
- Class 2 Residential (e.g., single-family homes, condos, multi-family)
- Class 3A Farm Property with a residence
- Cooperative Units
- Class 4A Commercial Property
The fee also applies to properties transferred in conjunction with a residential parcel, such as parking lots or mixed-use developments conveyed under a single transaction.
Graduated Fee Schedule
Total Consideration Fee Rate (Paid by Seller)
$1,000,001 – $2,000,000 1%
$2,000,001 – $2,500,000 2%
$2,500,001 – $3,000,000 2.5%
$3,000,001 – $3,500,000 3%
Over $3,500,000 3.5%
The fee is due upon recording of the deed and is collected by the County Recording Officer, then remitted to the NJ Division of Taxation.
Controlling Interest Transfer Tax for Non-Deed Transactions
What is a Controlling Interest Transfer?
A transfer of more than 50% ownership or beneficial interest in an entity (LLC, partnership, corporation, trust, etc.) that owns Class 4A commercial property with a value over $1 million is taxable under this regime, even if no deed is recorded.
- Applies whether the interest is transferred in one transaction or in multiple transactions within 6 months.
- Parties acting “in concert” (e.g., related entities or affiliates) are presumed to be part of a single transaction.
Tax Rates are graduated rates for Controlling Interest Transfer Tax.
Same graduated rates as deed-based transactions now apply:
Consideration / Property Value Tax Rate (Paid by Seller)
$1,000,001 – $2,000,000 1%
$2,000,001 – $2,500,000 2%
$2,500,001 – $3,000,000 2.5%
$3,000,001 – $3,500,000 3%
Over $3,500,000 3.5%
The seller must file a return with the Division of Taxation by the last day of the month following the month of the transaction and submit payment.
Exemptions:
The following transfers are not subject to the expanded fee mansion tax or controlling interest tax:
- Transfers to 501(c)(3) nonprofit entities.
- Transfers incident to corporate mergers or acquisitions, where real property value is <20% of total assets exchanged.
- Intercompany transfers within a combined group under the unitary business principle (e.g., between subsidiaries), effective for contracts dated after January 1, 2021.
- Transfers to/from the State, U.S. Government, or subdivisions thereof.
Affidavit and Filing Requirements:
- Affidavit of Consideration (by grantor) is mandatory for all Class 4 property transfers subject to the fee.
- Must be annexed to and recorded with the deed at the time of recording.
- The County Recording Officer must forward copies to the Division of Taxation monthly.
Refund Provision:
Sellers may apply for a refund of the amounts paid in excess of 1% under the following conditions:
- The deed is recorded on or before November 15, 2025, AND
- The transaction was made pursuant to a contract executed before July 10, 2025.
Deadline: Claim must be filed within one year of deed recording. Required Documentation: Contract, proof of consideration, and any additional info required by the Director of Taxation.
Summary and Actions to take immediately:
Assembly Bill A5804 has passed and has been signed by the Governor and takes effect on July 10, 2025. The expanded Mansion Tax (transfer fees) and the new seller-paid structure apply to all transfers of real property (via deed), and all transfers of a controlling interest in an entity that owns Class 4A commercial real property. If the closing/transfer occurs on or after July 10, 2025, Agents must begin collecting the new, higher Mansion Tax rates—and charging them to the seller—for all transactions closing on or after July 10, 2025, regardless of the contract date (unless refund eligibility applies – see above).
As a precaution, for any transaction that is scheduled to close between now and July 10, please escrow for the mansion tax based on the new rate in the event that the County Clerk may reject the deed for recording. Once the deed is on record, you may refund the remaining escrow to the parties on your transaction.
If a contract was fully executed before July 10, 2025, and the deed is recorded on or before November 15, 2025, the seller may apply for a refund of any fee amount paid in excess of 1% of consideration.